ECONOMY

Study predicts rise in private construction

Private construction is expected to go through a boom not seen since the 1970s, according to a study by the Construction Economics Institute (IOK). The rapid development of the real estate sector, including the development of the legal framework governing the sector, the 2004 Athens Olympics and the greater investment in real estate resulting from lower yields from alternative investments, is the main reason for this boom. Overall construction activity has been rising rapidly since 1997, when public infrastructure projects were given a boost due to the availability of European Union funds through successive Community Support Framework programs and the need to improve the infrastructure of the Athens area ahead of the Olympics. Still, companies active in private construction account for more than 50 percent of the turnover: In 2001, their turnover was 6.43 billion euros, whereas that of companies active in public projects was 5.61 billion. This distinction will become somewhat blurred in the coming years, the IOK report remarks, as several companies specializing in public works move over to private construction, which appears more promising. The companies themselves say that this diversification will help them make better use of their increased productive capacity. Private construction peaked in the 1960s and 1970s in response to the internal migration from the countryside into large cities – mostly Athens. To meet these internal migration needs, many one-story houses were demolished to make way for apartment buildings. Many homeowners were lured by an exchange system whereby they were given ownership of some of the apartments in return for giving their plots away or at very low prices. This new wave of private construction addresses some housing needs, but is expected to focus on office buildings and recreation spaces. The IOK study showed that there are 42,130 companies or individuals active in construction. Of those, 14,851 (35.24 percent) reside in Athens and its suburbs and 3,046 (7.24 percent) in Thessaloniki.